Here’s The Quite Bullish Silver Lining of Bitcoin’s Monday Plunge to $9,500

After surging as high as $10,000 on Sunday evening, Bitcoin slumped. The cryptocurrency, which has been subject to extreme volatility over the past two weeks, suddenly plunged from $10,000 to $9,700, then continued to drop to a daily low just below $9,500 just hours later.

Despite this rapid reversal, there is a silver lining.

The Silver Lining in Bitcoin’s Price Action

As pointed out by popular crypto trader CryptoHamster, Monday’s plunge wasn’t as bearish as many have painted it to be because BTC defended the key $9,500 support on four occasions over the past week, suggesting there remains a good amount of demand for the cryptocurrency.

Analysts have called the level crucial support, for $9,500 has long been a strong horizontal level for Bitcoin, often acting as a reversal point for bears when approached from above and a reversal for bulls when approached from below.

The level is also relevant because that is where there exists historical high volume, the  0.5 Fibonacci Retracement level of the drop from $14,000 to $6,400, and the 200 exponential moving average on the four-hour chart.

Long-Term Trend Looking Extremely Strong: Here’s Why

This isn’t the only thing that has analysts bullish on Bitcoin, especially from a longer-term perspective.

Per previous reports from NewsBTC, BTC’s one-day chart recently printed an extremely bullish sign: the 50-day simple moving average crossed above the 200-day moving average after forming a death cross last year.

This, for those unaware, is a technical analysis event known as a “golden cross,” whereas a short-term moving average crosses above a long-term one, a move that often suggests that a strong bull trend has formed. Most often, golden crosses are observed between the 50- and 200-day moving averages. This is especially relevant for Bitcoin because previous golden crosses led to extremely strong rallies.

Per data analyzed by this writer, previous golden crosses have marked the start of extremely strong price performances with the leading cryptocurrency.

For instance, one such technical occurrence that transpired in 2015 preceded Bitcoin’s surge from $300 to $20,000 or so, and another in 2012 was a precursor to a over 20,000% rally that took the asset from well under $10 to $1,000 and beyond.

On the fundamental side of things, Mark Yusko — chief of Morgan Creek Capital, an investment management firm — drew attention to three fundamental demand drivers that are likely to spur Bitcoin growth in the coming years in an interview with CNBC:

1. The impending 2020 block reward halving, which will cut the inflation rate of Bitcoin in half. A price model created by an institutional quantitative analyst suggested that after the halving, BTC will have a fair value of somewhere around $55,000 to $100,000. This is relevant because the model was
2. The growing levels of cryptocurrency use and adoption, evidenced by the surging number of active wallets on Bitcoin.
3. The continuing devaluing of fiat currencies by central banks, which are leveraging low interest rates and large-scale asset purchasing to spur economic growth.

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